Sears To Plead Guilty To Fraud

February 09, 1999

Sears, Roebuck & Co. said Tuesday it will plead guilty to fraud and pay a $60 million fine for illegally pursuing debts from bankrupt credit card customers. In an agreement with the government, a Sears subsidiary, Sears Bankruptcy Recovery Management Services, will admit that it failed to get approval from bankruptcy judges for debt-collection, or reaffirmation, agreements signed by credit card customers who sought Chapter 7 protection. Credit card debts are erased when customers file for bankruptcy. But when customers sign reaffirmation agreements, they agree to continue paying off their debt in exchange for keeping the credit card or keeping merchandise bought on credit. Some Sears debt collectors had threatened to repossess merchandise from customers unless they signed such agreements. Sears already has paid more than $180 million in restitution to debtors and $40 million in civil fines to 50 state attorneys general in connection with the scheme.